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Fornarotto v. American Waterworks Co.

May 13, 1998


Before: Greenberg, Nygaard and McKEE, Circuit Judges

The opinion of the court was delivered by: McKee, Circuit Judge.

On Appeal from the United States District Court for the District of New Jersey Civil Action No. 95-cv-05555

Argued: February 12, 1998

Opinion Filed: May 13, 1998


Joseph Fornarotto appeals from the district court's grant of summary judgment in favor of his employer, New Jersey- American Water Company. The district court ruled that this suit under ERISA was barred under New Jersey's entire controversy doctrine because Fornarotto's previously filed tort action was sufficiently related to the instant action to trigger application of that doctrine. For the reasons that follow we will reverse and remand for further proceedings consistent with this opinion.


Fornarotto was employed by the New Jersey-American Water Company (a subsidiary of American Waterworks Company, Inc.) for nearly 30 years, from March 7, 1966 until January 23, 1995. As a New Jersey-American employee, Fornarotto was eligible to participate in the company's pension plan which provided different levels of benefits to eligible employees, depending upon the circumstances under which they stopped working for the company. Those benefits include disability retirement benefits, if, inter alia, the employee becomes disabled and is "unable permanently to engage in any occupation or employment for compensation or profit." App. at 24.

On April 8, 1990, Fornarotto's union was on strike. He was walking a picket line when he was struck by an automobile driven by Michael Chiapetta, who was also a New Jersey-American employee.*fn1 Fornarotto was hospitalized for approximately 10 days in cervical and lumbar traction. After his discharge, he underwent a course of physical therapy for his neck, back and knee. In June of 1990, he underwent arthroscopic surgery on his knee, and began a new course of physical therapy.

On June 11, 1990, Fornarotto filed a personal injury action against Chiapetta, and New Jersey-American, in the Superior Court of New Jersey, Law Division, Monmouth County. Fornarotto v. Chiapetta and New Jersey-American Waterworks, Co., No. MON-L-54564-90. Thereafter, Fornarotto returned to work at New Jersey-American. However, he soon experienced additional problems with his knee, and began experiencing severe headaches. In March of 1992, he had a second arthroscopic surgery on his knee and was continuing to suffer severe headaches that first began after the accident. Fornarotto continued with physical therapy until May of 1992 when he was admitted to the hospital and again put in traction. He was released after about a week, but his rehabilitation did not go well, and he eventually needed back surgery. His physical problems persisted even after that surgery, and as a result of the lingering effects of his injuries, he had problems concentrating, sitting, standing, lifting or bending, and was unable to engage in any activity for more than a short period of time. He applied for disability benefits under his employer's benefits plan, but his requests for disability benefits were denied, and his final appeal from that decision was rejected on May 8, 1995. Fornarotto has not worked since January 23, 1993, and claims that he has been totally disabled since then.

On September 5, 1995, Fornarotto filed a complaint in the Superior Court of New Jersey, Law Division, Monmouth County, against American Waterworks and New Jersey- American Waterworks under the civil enforcement provisions of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1132(a)(1)(B), seeking disability benefits by reason of being disablied by the injuries he sustained in the automobile accident.*fn2 On October 27, 1995, the defendants removed the ERISA action to federal district court in New Jersey. In November of 1996, Fornarotto's state court personal injury action was settled for $450,000, and a Stipulation of Dismissal with Prejudice was filed. Shortly thereafter, on February 7, 1997, defendants filed a motion for summary judgment in Fornarotto's removed ERISA action. They alleged that the ERISA action arose from the same set of facts as Fornarotto's personal injury action and was therefore barred by New Jersey's entire controversy doctrine. The district court agreed and granted defendants' summary judgment motion. This appeal followed.*fn3


The "entire controversy doctrine seeks to assure that all aspects of a legal dispute occur in a single lawsuit." Olds v. Donnelly, 696 A.2d 633, 637 (N.J. 1997). Although res judicata principles and New Jersey's entire controversy doctrine are "blood relatives," the latter is New Jersey's "specific, and idiosyncratic, application of traditional res judicata principles." Rycoline Products, Inc. v. C & W Unlimited, 109 F.3d 883, 886 (3d Cir. 1997). The doctrine encompasses traditional concepts of claims joinder as well as party joinder, Olds v. Donnelly, 696 A.2d at 637, though cases involving the latter predominate.

The fundamental principle behind the inclusion policy of the entire controversy doctrine is that the adjudication of a legal controversy should occur in one litigation in one court; accordingly, all parties involved in a litigation should at the very least present in that proceeding all of their claims and defenses that are related to the underlying controversy.

Venuto v Witco Corp., 117 F.3d 754, 761 (3rd Cir. 1997).

"The objectives behind the doctrine are threefold: (1) to encourage the comprehensive and conclusive determination of a legal controversy; (2) to achieve party fairness . . . and (3) to promote judicial economy and efficiency by avoiding fragmented, multiple and duplicative litigation." Id. The doctrine is a "basic concept of judicial administration that is of constitutional dimension," viz., N.J. Const. (1947), art. IV, § 3, ¶ 4.*fn4 DiTrolio v. Antiles, 662 A.2d 494, 502 (N.J. 1995).

The rule evolved from common law concerns of joinder, and efficiency, but has since been codified and finds its current expression in Rule 4:30A of the New Jersey Rules of Civil Procedure, which provides:

Non-joinder of claims or parties required to be joined by the entire controversy doctrine shall result in the preclusion of the omitted claims to the extent required by the entire controversy doctrine, except as otherwise provided by R. 4:64-5 (foreclosure actions) and R. 4:67-4(a) (leave required for counterclaims or cross- claims in summary actions).*fn5

However, as is true with the infamous "rule against perpetuities", the entire controversy doctrine is easily recited, but often deceptively elusive and problematic in application.*fn6 This is because it is often difficult to define the parameters of "a legal controversy" or "one litigation" with the precision suggested by the doctrine.

In determining whether successive claims constitute one controversy for purposes of the [entire controversy] doctrine, the central question is whether the claims against the different parties arise from related facts or the same transaction or series of transactions. It is the core set of facts that provides the link between distinct claims against the same or different parties and triggers the requirement that they be determined in one proceeding. One measure of whether distinct claims are part of an entire controversy is whether parties have a significant interest in the Disposition of a particular claim, one that may materially affect or be materially affected by the Disposition of that claim. The test for whether claims are "related" such that they must be brought in a single action under the New Jersey entire controversy doctrine . . . [is] as follows: if parties or persons will, after final judgment is entered, be likely to have to engage in additional litigation to conclusively dispose of ...

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